Internet of Things (IoT) technology can transform processes to make them more efficient and convenient. NMI CEO Vijay Sondhi points out that IoT doesn’t necessarily enable new processes — it just makes the things we do easier, payments included. In a podcast with PYMNTS.com president Karen Webster, Sondhi illustrated his point with a few examples of how payments integrated with IoT systems can create seamless experiences that save time and effort.
Automatic payment for parking and tolls
Sondhi says commuters are all-too-familiar with cardstock tickets with a magnetic stripe that they’d collect when entering a parking garage or a toll road. They’d have to keep track of the card until the time to pay by handing it to an attendant or inserting it into a machine to pay the toll.
He says a better, IoT-enabled experience involves a near-field communication (NFC) chip in your car that includes payment credentials. As you drive into a parking garage or onto a toll road, an NFC reader collects your information, the system authenticates your identity, your payment is preauthorized, and when you exit the parking facility or toll road, you receive a printed or email receipt. “It’s an old experience made much better,” Sondhi explains.
He adds that if a car doesn’t have the NFC technology that would enable this process, a device similar to an E-ZPass, or FasTrak transponder could transmit payment data. Alternately, the system could use license plate recognition so the consumer wouldn’t have to purchase any hardware. Sondhi explains that with this type of system, the consumer sets up a profile on the parking or transportation organization’s website. Then, when the driver passes through a gate, the license plate is scanned to initiate the payment transaction and, when it’s complete, the driver receives an e-receipt.
Easy, engaging charitable giving
Sondhi says another use case with great potential for IoT with integrated payments is charitable giving. NMI partnered with the City of Bristol and the Bristol Children’s Hospital Charity in the UK to establish “tap-and-go” donation kiosks that accepted contactless payments. The kiosks were displayed on the charity’s sculpture trail with characters from the popular children’s television series “Wallace & Gromit.”
Users could tap their contactless cards to make donations to the charity. Sondhi says one of the reasons contactless payments are so popular in the UK is that for payments of less than £50 don’t require a PIN. “People interacted with the devices, and it was so fast,” Sondhi says. “The numbers were quite extraordinary.” In fact, the unattended payment system increased donations to the charity by 309 percent.
Sondhi says similar systems could benefit US charitable organizations or churches; a kiosk in the lobby or entrance to a building could allow people to tap and go to make donations. He stresses that keeping the donation process as simple as possible is the key. When people identify with a cause and want to make a donation based on emotion, having to enter a PIN or authenticate a transaction with a signature may create too much friction for them to continue.
Sondhi adds that IoT technology could also potentially solve problems for consumers in new ways. For example, consumers that have set up automated payments could benefit from an AI virtual assistant that anticipates changes in financial behavior. If you are about to experience a price increase for car insurance, the virtual assistant could inform you that it compared prices, and you could save $200 per year by switching to another company – and it could provide your new company with the information it needs to make the switch. “You’re going to see innovation where there is anticipation of your needs before you even know those needs are there,” he says.
Payments are at the core
IoT systems with integrated payments, says Sondhi, allow payment credentials “to be served up automatically without us even thinking about it.” He says this represents a huge opportunity for the payments industry which requires interoperable standards to have payment credentials exchanged across different devices and in different contexts. “Payments are at the core of those experiences,” he concludes.
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